Gannett to explore dividend cut to conserve cash

NEW YORK 
Gannett Co. said Friday that its board would explore a dividend cut next month as the nation's largest newspaper publisher looks to conserve cash.

To offset steep declines in advertising revenue, Gannett laid off thousands of employees late last year and imposed a one-week unpaid furlough during the current quarter.

But the board opted in October to leave the quarterly dividend rate at 40 cents a share "to see what the impact of a burgeoning credit crisis and more difficult economic conditions would bring," said Gracia Martore, the company's chief financial officer.

At the current level, Gannett spends about $365 million annually on dividends. That amounts to a trailing dividend yield of 23 percent, with Gannett's stock closing Thursday at $6.90.

"The next time the board has to act on the dividend is in February, and I know that there will be significant conversation around that in the context of where credit markets are, where the economies are, and where cash conservation comes into play across the country," Martore said. "So we will take that up with the board again in February and we will act appropriately."

Debt at Gannett, widely regarded as one of the most fiscally sound newspaper publishers, stood at $3.8 billion at year's end, a figure expected to decline to $3.7 billion by March.

Other newspaper publishers already have slashed their dividend rates in recent months.

In November, The New York Times Co. decided to slash its quarterly dividend by 74 percent, a move that saves the company $98 million annually but also curtails the income of the Sulzberger family, the controlling shareholders of the storied newspaper publisher.

Earlier this week, Media General Inc. said it was suspending dividend payments to conserve cash for debt payments, while McClatchy Co. said it would suspend dividends after making an April 1 payment of 9 cents per share. Last fall, McClatchy slashed dividends in half, from the previous 18 cents per share.

Ken Doctor, a media analyst with research firm Outsell Inc., said he was surprised Gannett hasn't cut dividends already given all the payroll and other cuts they have been making.

"They have been the last holdout in that," he said. "They need every dollar they can for operations."